After racking up huge profits as they appeared from the financial crisis aided by billions in bailout money from taxpayers, Wall Street banks are now in for a sturdy struggle. Write-offs from bad mortgages, a difficult trading environment and a narrow crackdown mean profits are going to be harder to come by. Reflecting the depressing outlook, the stocks of some financial businesses have fallen to year lows, leaving bankers with the likelihood of more pink slips and lighter bonuses.
JPMorgan Chase, the first major bank to report its periodical financial, posted higher than anticipated profits, but could still be on the hook for payouts totaling as much as $6 billion to fix faulty foreclosures and settle with regulators.
While Citi, the other big bank to report results this week, also surpassed prospect, it was with stuffing from the release of $2 billion that had been reserved to cover bad loans.
Further than the need to keep cleaning up from the mortgage mess, banks also could see their profits undulating by financial disorder in Europe, with Greece poised to collapse under the weight of a heavy debt burden.
Putting a focus on those woes and the probable for the dilemma to spread here a new round of stress analysis released Friday found that several European banks lack reserves to stay alive a financial shock such as a Greek default.